New York Named National Leader in Fight Against Wage Theft

By Josh Eidelson

One year after New York’s new wage theft law took effect, the Progressive States Network has named the state the nation’s leader in confronting the issue. Speaking on a media call Wednesday, PSN Senior Policy Specialist Tim Judson said the 2010 law has proved “the strongest in the country.” But he warned that the national picture remains bleak: “Where wage theft is concerned, there are essentially no cops on the beat.”

“Wage theft” is a new term for an old issue: employers not paying workers their agreed-to wages. It takes many forms: withholding wages; not paying overtime rate for overtime hours; paying below minimum wage; pressing workers to work off the clock. In 2010, In These Timescontributor Art Levine reported on the case of immigrant workers who were paid under $2 an hour for work at the New York State Fair.

As Michelle Chen has reported, a survey conducted by the National Employment Law Project in 2008 estimated that wage theft costs the average low-wage worker a full 15 percent of annual income. NELP estimated New York’s unpaid wages at $1.5 billion denied to half a million workers. Analysis by the Drum Major Institute calculated that those lost wages meant a loss of $427 million in revenue for the state, which faces a $350 million budget deficit.

Judson is the co-author, with PSN’s Cristina Francisco-McGuire, of a new report, Cracking Down on Wage Theft: State Strategies for Protecting Workers and Recovering Revenues. They write that wage theft has steep costs low-wage workers, high-road employers, and cash-strapped governments. “Existing wage payment statutes,” they conclude, “have proved too modest and incomplete to be an effective deterrent against what has become a pervasive and entrenched problem.”

In 2009, the community organizing group Make the Road New York (MRNY) began a campaign which, with backing from a progressive coalition, led to the passage of New York’s 2010 Wage Theft Prevention Act.

On Wednesday’s call, MRNY co-executive director Deborah Axt said the legislation “grew out of the experience of the members and attorneys” involved, who had “seen firsthand what the failings of the law were…there were no teeth in the protections.” Axt calls the remedies available before last year – which were already stronger than most states’ – “pathetically weak.” Amador Rivas, a member of MRNY’s worker committee (speaking through a translator on the same call), said, “We would often see that we would resolve a worker’s wage theft case, and then they would move onto a new employer and then experience the same thing all over again.”

Judson and Francisco-McGuire observe that over recent decades, at the same time that unionization has been plummeting, the federal Department of Labor’s ability to combat wage theft has been hampered by a sharp decline in the ratio of enforcement agents to workers: from one agent for every 11,000 in 1941, to one for every 141,000. But recent years have also seen a rise in worker’s centers, which organize nonunion workers and pressure employers and local governments over working conditions – including wage theft.

Judson and Francisco-McGuire write that the Wage Theft Prevention Act made three major improvements to New York’s existing law. First, it strengthened transparency and notice-keeping requirements, including requiring that employers notify workers a week ahead of time before changing wage rates or paydays. Second, it strengthened damages, raising penalties from 25 percent of unpaid wages to 100 percent, which will now increase if employers don’t pay up within 90 days. Finally, it strengthened protections for workers who come forward: The law established fines of up to $10,000 for retaliation, expanded its definition, and extended its protection to workers who step up to advocate for their co-workers.

Before the new law went into effect last April, says Rivas, “The fine for wage theft was so light and the protections for workers were so weak, that it just made sense to violate the law.”

Axt says that information on the law has gotten out on several fronts: MRNY and other organizations have spread the word through their membership; private attorneys have taken a greater interest in wage theft cases; and the law has brought greater local media coverage to the issue. She says at least 2,500 people were reached through “direct outreach,”and “hundreds of new workers have come in our doors having heard about the law’s passage.”

Wage theft bills became law in New Mexico in 2009 and—as Kari Lyderson has reported—in Illinois in 2010. The wave of wage theft laws has also inspired conservative pushback. PSN notes that New York’s Republican-majority Senate has already passed a bill that would end the bill’s annual wage notice provision. As Mike Elk has reported, in Florida, where the legislature abolished the state labor department in 2002, Republicans are pushing a law to pre-empt Miami-Dade County’s 2010 ordinance.

Rivas cites the new law’s role in helping workers take on the New York City restaurant Veranda. The restaurant was forced to pay $150,000 to 25 workers for wage theft, and an additional $50,000 to two whom it had fired after they raised the issue. “This kind of fine and penalty,” says Rivas, “makes it so that employers, for the first time, who were exploiting their employees and taking advantage of their workers have to take the law seriously.”

Judson and Francisco-McGuire note that there’s still room for improvement in New York’s law, most significantly in expanding its coverage to encompass farmworkers and those workers misclassified as independent contractors. “The sheer scale of the wage theft problem can seem daunting,” they write, “but not nearly so much so as the consequences of ignoring it.”